Hearing Date Set for Circuit City Liquidation Plan and News on Other Banrupt U.S. Companies

The items below are excerpted from the Business Bankruptcy News Bulletin. A full issue contains information on dozens of troubled companies, as well as informational and analysis highlights. Please visit the insideARM bookstore for information on subscribing to the Bulletin.

Labor Relations, a Sticky Issue for Companies Coming Out of Bankruptcy

Companies that emerge from Chapter 11 bankruptcy protection often have a struggle ahead of them in a number of areas. One area that often needs addressing is management’s relationship with labor–which may have soured significantly during the reorganization process.  One only need to look at the Northwest Airlines Corp. bankruptcy. The carrier was able to emerge only after its flight attendants reluctantly accepted a new collective bargaining agreement that saved the firm $1.4 billion a year. However, even though they agreed on the deal, the flight attendants expressed dissatisfaction with many of the terms of the contract, announcing they would keep on fighting for better terms.

So when a company announces it is emerging from Chapter 11 protection, don’t think for one minute that spells the end of any problems for the once-bankrupt company.

Bankrupt Companies

American Commercial Inc., Secaucus, N.J., filed Chapter 11 in the U.S. Bankruptcy Court in New Jersey. The firm listed assets of between $50 million and $100 million and liabilities of between $10 million and $50 million. The filing was under case number 09-35359. For more information contact the court at 877-239-2547.

Bruno’s Supermarkets has seen the U.S. Bankruptcy Court confirm its plan of liquidation. The privately-held supermarket chain which filed Chapter 11 earlier in the year, had expected to restructure its operations, focusing on its core operations.

Circuit City Stores Inc. has seen the U.S. Bankruptcy Court for the Eastern District of Virginia set a hearing date of 11/23 to consider the First Amended Joint Plan of Liquidation.  For more information call the court at 800-326-5879 and reference case number 08-35653.

Extended Stay Inc., the bankrupt Spartanburg, S.C. hotel firm which filed bankruptcy last June in the U.S. Bankruptcy Court in Manhattan, N.Y. under case number 09-13764, has seen a group of creditors seek to purchase the firm’s $4 billion first mortgage.  As part of the buyout, the creditor group would put up $700 million in new equity. The group, which is led by Starwood Capital Group, consists of D.E. Shaw Group, Five Mile Capital Partners LLC and Fortress Investment Group LLC.

Filene’s Basement Inc., which sold off its retail outlets last summer, has asked the U.S. Bankruptcy Court to approve a deal it reached with its former parent company, Retail Ventures Inc. as well as its former affiliate DSW Inc., that would eliminate nearly $70 million in claims.  As part of the agreement, Retail Ventures would gain responsibility over Filene’s pension plan while also releasing more than $50 million in unsecured notes it currently holds.

Pilgrim’s Pride Corp., the Pittsburg, Tx. poultry company which has submitted a reorganization plan and disclosure statement with its subsidiaries, expects to emerge from Chapter 11 before the end of the year. JBS SA of Brazil, through a U.S. unit, will acquire a majority interest in Pilgrim’s Pride for $800 million in cash. For more information contact the U.S. Bankruptcy Court for the Northern District of Texas at 800-886 9008.

SemGroup LP’s disclosure statement was approved by the U.S. Bankruptcy Court, possibly paving the way for the privately-held Tulsa, Ok. oil and gas firm to emerge from Chapter 11 as early as 11/6. Also, a deal was signed that would pay its producers $337 million for gas and oil purchased on credit when SemGroup filed for bankruptcy protection more than a year ago.

Vectrix Corp., the New Bedford, Ma. electric scooter firm, has filed Chapter 11, asking the court to set a 10/29 hearing date to auction off its assets.  The company reported that a unit of battery maker Gold Peak Industries Holdings Ltd. along with GH Venture Partners LLC have teamed up to submit a $5 million bid for he Vectrix’s assets.